REGISTRATION STATEMENT NO. 33-78284
RULE 424(b)(3)
PROSPECTUS
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ATLANTIC GULF COMMUNITIES CORPORATION
189,876 SHARES OF COMMON STOCK
This Prospectus relates to the offering and resale by First Union Bank
of Florida (the "Trustee" or the "Selling Stockholder"), as trustee under a
Restated, Amended and Consolidated Trust (the "Trust") of up to 189,876 shares
of common stock, $.10 par value (the "Common Stock"), of Atlantic Gulf
Communities Corporation, a Delaware corporation (the "Company"). The shares of
Common Stock to which this Prospectus relates have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), on behalf of the
Selling Stockholder to permit their public sale or other distribution. See
"Selling Stockholder" and "Plan of Distribution."
The net proceeds of the sale of the Common Stock will be held by the
Trustee for the Trust. The Trust is the successor to the trusts created pursuant
to the Company's Plan of Reorganization to provide funds to satisfy certain
remaining Company obligations following the completion of the reorganization.
The Trustee will, from time to time, disburse funds from the Trust to the
Company for use in meeting such obligations. See "Selling Stockholder."
The Common Stock is traded on the NASDAQ National Market System under
the symbol "AGLF." The last reported sale price of the Common Stock on the
NASDAQ National Market System on July 1, 1997 was $6.75. See "Price Range of
Common Stock and Dividends."
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SEE "RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The Common Stock may be sold from time to time by the Selling
Stockholder through dealers, brokers or other agents at market prices prevailing
at the time of sale. The Company will bear substantially all of the expenses
incident to the registration of the Common Stock, which are estimated to be
approximately $30,000. The Selling Stockholder and any dealers, brokers or
agents that participate with the Selling Stockholder in the distribution of the
Common Stock to which this Prospectus relates may be deemed to be "underwriters"
within the meaning of the Securities Act and any commissions received by them
and any profit on the resale of such Common Stock purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. See
"Plan of Distribution."
The date of this Prospectus is July 3, 1997
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
PAGE
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Available Information 2
Documents Incorporated by Reference 3
The Company 4
Recent Developments 5
Risk Factors 7
Price Range of Common Stock and Dividends 11
Use of Proceeds 12
Selling Stockholder 12
Plan of Distribution 13
Legal Matters 14
Experts 14
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission,
including the Registration Statement on Form S-3 of which this Prospectus is a
part, may be inspected and copied at the public reference facilities maintained
by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Seven World
Trade Center, New York, New York 10048 and 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Common Stock is traded in the over-the-counter
market and is listed in the NASDAQ National Market System. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants, such as the
Company, that file electronically with the Commission. Copies of the Company's
reports, proxy statements and other information filed with the Commission can
also be inspected at the offices of the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto, certain parts of which are omitted as permitted by the rules and
regulations of the Commission. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an
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exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information regarding the Company
and the securities offered hereby, reference is made to the Registration
Statement and to the exhibits thereto.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by this
reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed April 14, 1997, and Amendment No. 1 thereto filed on
Form 10-K/A on April 30, 1997.
(2) The Company's Current Report on Form 8-K filed February 18, 1997.
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed May 15, 1997.
(4) The Company's Proxy Statement dated May 21, 1997.
(5) The Company's Current Report on Form 8-K filed June 5, 1997.
(6) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed under Section 12 of the Exchange Act,
dated March 20, 1992.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date any such document is filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request, a copy of any and
all of the documents incorporated by reference herein, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents. Any such request may be directed to Atlantic Gulf
Communities Corporation, Attention: Thomas W. Jeffrey, Esq., at the Company's
principal executive offices, which are located at 2601 South Bayshore Drive,
Miami, Florida 33133-5461, telephone number (305) 859-4000.
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UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) REFERENCES TO THE "COMPANY"
INCLUDE ATLANTIC GULF COMMUNITIES CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES,
AND (II) REFERENCES TO "ATLANTIC GULF" REFER SOLELY TO ATLANTIC GULF COMMUNITIES
CORPORATION.
THE COMPANY
The Company is a Florida-based real estate development and asset
management company. The Company's primary lines of business are acquisition,
development and sale of new subdivision and scattered developed homesites, sale
of land tracts and residential construction and sales. Additional lines of
business which contribute to the Company's overall operations include portfolio
management of mortgages and contracts receivable and environmental services.
The Company acquires and develops real estate to: (a) enhance the value
of certain properties, (b) maintain a continuing inventory of marketable tracts
and (c) supply finished homesites to builders in Florida's fastest growing
markets. The Company's acquisition and development activities are comprised of
four primary functions: business development, planning, community development
and residential construction.
The Company's goal is to produce superior returns for stockholders by
liquidating assets of the Predecessor Company (as defined below), paying off
debt, matching overhead to development and construction activities, and becoming
the leading supplier of finished homesites to independent homebuilders in
Florida's fastest growing markets and in selected primary markets in the
southeastern United States, without the exposure entailed in carrying a
substantial inventory of land.
The Company and its predecessors have been operating as community
developers in Florida since 1955. Atlantic Gulf's immediate predecessor, General
Development Corporation (the "Predecessor Company"), was among the largest
community developers in Florida. In 1990, the Predecessor Company and certain of
its subsidiaries commenced proceedings under Chapter 11 of the Bankruptcy Code
(the "Reorganization Proceedings") to reorganize their business. Atlantic Gulf
emerged from the Reorganization Proceedings pursuant to a plan of reorganization
(the "POR") that became effective on March 31, 1992 (the "POR Effective Date").
The Company was incorporated in Delaware in 1928. Its executive offices
are located at 2601 South Bayshore Drive, Miami, Florida 33133-5461, and its
telephone number is (305) 859-4000.
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RECENT DEVELOPMENTS
THE APOLLO TRANSACTION
The Company and AP-AGC, LLC, a Delaware limited liability company
("Apollo"), have entered into an Amended and Restated Investment Agreement dated
as of February 7, 1997, amended as of March 20, 1997, and amended and restated
as of May 15, 1997 (the "Investment Agreement") which provides that, subject to
the prior satisfaction of certain conditions, the Company would issue to Apollo
(a) up to 2,500,000 shares of 20% Series A Cumulative Redeemable Convertible
Preferred Stock (the "Series A Preferred Stock") with a liquidation preference
of $10 per share at a per share price of $9.88 and Warrants to purchase up to
5,000,000 shares of Common Stock ("Investor Warrants") at a per warrant price of
$0.06. Apollo agreed to purchase at least 500,000 shares of Series A Preferred
Stock and 1,000,000 Investor Warrants at a closing to occur promptly following
stockholder approval. From time to time thereafter and until Apollo has acquired
all of the 2,500,000 shares of Series A Preferred Stock and the 5,000,000
Investor Warrants, Apollo agreed to purchase, subject to the terms and
conditions of the Investment Agreement, additional Series A Preferred Stock and
Investor Warrants to enable the Company to invest in real estate development
projects approved by the Company's board of directors and Apollo. If the Company
has not presented Apollo with real estate development projects pursuant to which
Apollo has invested the aggregate purchase price of $25,000,000, on the terms
and conditions set forth in the Investment Agreement, (a) Apollo will be
entitled at any time to acquire all of the Series A Preferred Stock and Investor
Warrants not acquired by it prior thereto and (b) from and after June 30, 1998,
the Company will be entitled at any time to require Apollo to purchase all of
such Series A Preferred Stock and Investor Warrants, provided that no Event of
Default (as defined in the Note Agreement) shall have occurred and, except for
an Event of Default which is or results from a Bankruptcy Event (as defined),
shall then exist (the "Apollo Transaction"). The Company, certain of its
subsidiaries and Apollo have also entered into a Secured Note Agreement dated as
of February 7, 1997, and amended and restated as of May 15, 1997 (the "Note
Agreement" and, together with the Investment Agreement, the "Agreements").
Apollo is an affiliate of Apollo Real Estate Investment Fund II, L.P., a private
real estate investment fund, the general partner of which is Apollo Real Estate
Advisors II, L.P., a New York-based investment fund.
THE PRIVATE PLACEMENT
Concurrent with and as a condition to the closing of the Apollo
Transaction, the Company sold in a private placement, for an aggregate purchase
price of $20 million, (i) 1,776,199 shares of Common Stock for $10 million and
(ii) 1,000,000 shares of Series B Preferred Stock and Series B Warrants
(consisting of 666,667 Class A Warrants, 666,666 Class B Warrants and 666,666
Class C Warrants) to purchase 2,000,000 shares of Common Stock, for $10 million
(the "Private Placement").
THE RIGHTS OFFERING
The Investment Agreement contemplates that the Company will make
available for sale to the Company's stockholders in a rights offering units
composed of 1,000,000 shares of Series B Preferred Stock with a liquidation
preference of $10 per share and Warrants to purchase 2,000,000 shares of Common
Stock ("Units"), for an aggregate purchase price of $10 million (the "Rights
Offering"). The Company currently anticipates commencing the Rights Offering
during the third quarter of 1997 to stockholders of record on June 20, 1997.
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STOCKHOLDER APPROVAL AND FIRST CLOSING
The issuance of the Series A Preferred Stock, the Investor Warrants and
the Units were conditioned on approval by the Company's stockholders of an
Amended and Restated Certificate of Incorporation of the Company which contains
certain amendments (the "Charter Amendments") to the Company's certificate of
incorporation required to effect the transactions contemplated by the Investment
Agreement, including the Rights Offering. Stockholders approval of the Charter
Amendments and of the Apollo Transaction, the Private Placement and the Rights
Offering was obtained at the Company's annual meeting of stockholders held on
June 23, 1997. In conjunction with the closing on the issuance of the Series A
Preferred Stock and the Investor Warrants on June 24, 1997, the following
transactions occurred:
1. CHARTER AMENDMENTS. The Company filed with the State of
Delaware the Charter Amendments which, among other things,
increased the number of authorized shares of Common Stock from
15,665,000 to 70,000,000 and authorized the issuance of
4,500,000 shares of Preferred Stock, 2,500,000 of which are
designated Series A Preferred Stock and 2,000,000 of which are
designated Series B Preferred Stock.
2. SALE OF SERIES A PREFERRED STOCK AND INVESTOR WARRANTS. For an
aggregate purchase price of $5,534,752, the Company issued to
Apollo 553,475 shares of Series A Preferred Stock and Investor
Warrants (consisting of 368,983 Class A Warrants, 368,983
Class B Warrants and 368,984 Class C Warrants) to purchase
1,106,950 shares of Common Stock at a per share purchase price
of $5.75 (subject to adjustment).
3. THE BOARD. The number of directors was reduced from 10 to
seven and three Apollo designees were elected to the Board.
THE SECOND CLOSING
On June 30, 1997, the Company issued for an aggregate purchase price of
$3,340,000 to Apollo 334,000 additional shares of Series A Preferred Stock and
Investor Warrants (consisting of 222,666 Class A Warrants, 222,667 Class B
Warrants and 222,667 Class C Warrants) to purchase an additional 668,000 shares
of Common Stock at a per share purchase price of $5.75 (subject to adjustment).
The Company's Proxy Statement dated May 21, 1997 includes further
information with respect to the Apollo Transaction, the Private Placement, the
Rights Offering and related matters. See "Documents Incorporated by Reference."
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RISK FACTORS
HIGH LEVEL OF DEBT; CAPITAL RESOURCES
The Company has a high level of debt. Approximately $43.3 million of
indebtedness to Foothill Capital Corporation ("Foothill Debt") matures in the
next twelve months (approximately $21.67 million on each of December 31, 1997
and June 30, 1998). The balance of approximately $20 million of Foothill Debt
and an additional $39.6 million in certain unsecured cash flow notes mature on
December 31, 1998. The Company currently does not have sufficient liquidity and
capital resources to satisfy such indebtedness and to implement fully its
business plan. Management believes, however, that sufficient liquidity and
capital resources to satisfy such indebtedness and to implement fully the
Company's business plan will be provided by a combination of sources, including
the Apollo Transaction, the Private Placement and the Rights Offering, the
accelerated disposition of non-core tract and scattered homesite assets, the
monetizing of predecessor assets, refinancings, and revenues from operations.
LOSSES
During the year ended December 31, 1996, the Company had net income of
approximately $1.2 million, including an extraordinary gain of approximately
$13.7 million resulting from the extinguishment of debt and an operating loss of
$12.5 million. The Company had a net loss of $20.6 million for the year ended
December 31, 1995. During the first quarter of 1997, the Company incurred a net
loss of $7.3 million compared to net income of $3.4 million during the first
quarter of 1996 primarily due to a $5.7 million decrease in other income and a
$3.8 million extraordinary gain in the first quarter of 1996 resulting from the
cancellation of debt. The Company expects to achieve operating profitability
through some combination of growth in revenues and reductions in debt, fixed
expenses and overhead.
FLORIDA REAL ESTATE MARKET
The Company's success is affected by the risks generally incident to
the real estate business, including risks generally incident to the Florida real
estate market. The Florida real estate market historically has been cyclical,
and the Company's business may be affected by changes in the Florida and
national economy and changes in the levels of interest rates. Any downturn in
the Florida or national economy or increase in interest rates can have adverse
effects on sales and profitability and on the Company's ability to make required
payments on debt.
REGULATORY AND ENVIRONMENTAL MATTERS
The Company's real estate operations are regulated by various local,
regional, state and federal agencies. The extent and nature of these regulations
include matters such as planning, zoning, design, construction of improvements,
environmental considerations and sales activities. Local, regional, state and
federal laws, regulations and policies regarding the protection of the
environment directly affect the Company and its business. The Company has
permits for certain of its development projects, issued by a variety of
governmental entities. Ongoing permitting obligations may include a range of
environmental, maintenance and monitoring obligations, including water quality
monitoring, surface water management and wetlands mitigation.
A small portion of the Company's land holdings contain residues or
contaminants from current and past activities by the Company, its lessees, prior
owners and operators of the properties and/or unaffiliated parties. Some of
these areas have been the subject of cleanup action by the Company voluntarily
or following the
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involvement of regulatory agencies. Additional cleanup in the future also may be
required. The Company's business is subject to additional obligations under the
environmental laws, relating to both ongoing operations as well as past
activities. Compliance with environmental restrictions is likely to become more
costly and time consuming for the Company in the future. The Company believes,
however, that its obligations under the environmental laws will not have a
material adverse affect on its business, results of operations or financial
position.
Certain of the Company's tract inventory is subject to permits and
regulatory approvals which enhance the marketability of the property. In some
cases, preserving the permits and approvals prior to sale could require
additional development in the future, subject to growth thresholds such as
traffic patterns. To the extent the Company chooses not to undertake development
work required by a permit or approval for a specific tract within the indicated
time period, the Company's targeted gross margins for that tract could be
adversely affected based upon a revised development plan or land use.
COMPETITION
Real estate operations, particularly in Florida, are highly
competitive. Competition with respect to tract sales of Florida real estate has
been heightened by the general lack of available bank financing for real estate
acquisition and development which reduces the number of buyers who have the
financial resources and development expertise to transform these tracts into
finished homesites. For tract sales, the Company competes with other real estate
sellers for developers/builders and other real estate investors on the basis of
location, permitted uses, financing and price.
In the development and sale of new homesite subdivisions, the Company
has focused on acquiring new properties in Florida's primary markets and in
selected primary markets in the Southeast. The supply of finished lots in the
primary markets has been significantly reduced from its levels in recent years
due to a combination of several factors, including a reduction in the capital
available for the acquisition and development of new homesites and a reduction
in the number of real estate developers active in new subdivision acquisition
and development. Also, homebuilders are reluctant to acquire and develop
finished homesites due to a lack of expertise and the substantial cost
associated with carrying finished inventory. Nevertheless, the Company continues
to compete on the basis of price, product and location with other developers and
homebuilders in those markets.
The secondary Florida markets, where the Company's scattered homesite
inventory is located, are also highly competitive. With respect to the sale of
scattered homesites in the secondary Florida markets, there is a significant
oversupply of buildable homesites developed by the Predecessor Company remaining
on the market. Because the primary buyers for the scattered buildable homesites
are small independent homebuilders, the Company competes for their business on
the basis of price and location.
ABSENCE OF DIVIDENDS
No dividends have been declared or paid by the Company on its Common
Stock. Based upon the Company's existing debt obligations, its anticipated net
cash flows and its business plan, management does not anticipate the Company
having available cash to pay any cash dividends on the Common Stock in the
foreseeable future. Also, no cash dividends can be paid on Common Stock while
any dividend arrearages exist on the Preferred Stock. Furthermore, the Company's
current debt obligations prohibit the payment of any dividend (other than
dividends payable solely in common stock or preferred stock of the Company).
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EFFECT ON COMMON STOCK OF SHARES ELIGIBLE FOR FUTURE SALE
The conversion of the Preferred Stock and the exercise of warrants and
options, along with the issuance of Common Stock under other Company
compensation plans, would result in the issuance of a substantial amount of
Common Stock, thereby diluting the proportionate equity interests of the holders
of the Common Stock. No prediction can be made as to the effect, if any, that
future sales of Common Stock, or the availability of shares for future sales,
will have on the market price of the Common Stock prevailing from time to time.
Sales of substantial amounts of Common Stock (including shares issued upon the
conversion of Preferred Stock or exercise of warrants or options), or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock.
CONTROL OF THE COMPANY BY APOLLO
As long as Apollo holds at least 500,000 shares of Series A Preferred
Stock, (a) the holder(s) of the Series A Preferred Stock will have the right to
elect three of the seven Board members and (b) without Apollo's consent, the
Company will not have the right to engage in or enter into any agreement with
respect to certain major transactions. In addition to Apollo's right to elect
three Board members, Apollo could obtain sufficient ownership of Common Stock
having the power to elect one or more additional Board members, or otherwise
significant voting power on matters other than the election of directors. Based
upon certain assumptions, Apollo's percentage ownership of Common Stock could
range up to approximately 49%. There can be no assurance regarding the effect
that Apollo's influence on and participation in the Company's management will
have on the Company's financial condition and performance. The foregoing, along
with the issuance of the Series B Preferred Stock, could also have certain
anti-takeover effects. Such effects could discourage and frustrate an attempt to
acquire the Company, thus depriving Stockholders of the benefits that could
result from such an attempt including a merger or tender offer in which
Stockholders might receive a premium over the market price of their Common
Stock.
AVAILABILITY OF NET OPERATING LOSS CARRYFORWARDS
Section 382 of the Internal Revenue Code of 1986, as amended (the
"Code"), limits a corporation's ability to carry forward its net operating
losses and other tax attributes following a transfer of stock or changes in a
corporation's equity structure which results in a "change of ownership." The
determination of whether a change of ownership occurs is made by determining for
each "five-percent shareholder" of the corporation the excess, if any, of his
percentage ownership of the corporation's stock over his smallest percentage
ownership during the three prior years. If the total of such increases exceeds
50 percentage points, there has been a change of ownership for purposes of
Section 382. A five-percent shareholder generally refers to any person that
directly or indirectly owns five percent or more of the total value of the
corporation's stock at any time during the three years analysis period. As a
result of certain transactions, several less than five percent shareholders may
be aggregated and treated as a single five-percent shareholder whose increase in
ownership is taken into account. At December 31, 1996, the Company had
approximately $207 million of unused net operating loss ("NOL") carry forwards
which expire in years 1999 through 2010. Included in this amount is
approximately $24.1 million of net operating loss attributable to certain legal
entities that may only be used against future taxable income of these same
entities. As reflected in the Company's audited financial statements for the
year ended December 31, 1996, the tax effected NOL of approximately $78 million
has been included in the valuation allowance which effectively reduces the net
deferred tax asset to zero. For financial statement purposes, a valuation
allowance is required if, based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred tax asset will not be
realized. As a result of the Company's high basis in Predecessor assets and
certain
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of the factors, it is possible that, even without a change of ownership, a
substantial portion of its existing NOLs could expire before the Company was
able to utilize them.
The Company cannot determine at this time whether the Apollo
Transaction, the Private Placement and the Rights Offering will result in a
Section 382 change of ownership. That determination is dependent on several
factors that are not known at this time (e.g., the portion of the stock issued
in such transactions that will be acquired by actual or deemed five-percent
shareholders and the Common Stock prices prevailing at the time the transactions
are consummated). Once these factors are known, the Company may determine that
the consummation of such transactions will result or have resulted in a change
of ownership. Further, even if a change of ownership does not result
immediately, such transactions will result in an increase in ownership of
five-percent shareholders of the Company, and , therefore, will significantly
increase the risk that a subsequent transaction within three years (over which
the Company may not have control) would cause a change of ownership of the
Company. If a change of ownership were to occur, the Company's ability to carry
forward its existing NOLs to offset future income and gain would be subject to
an annual limitation. The impact of this limitation cannot be predicted with any
certainty because the amount of the limitation would depend on the value of the
Common Stock and on interest rates in effect at the time the change of ownership
occurred. However, based on recent Common Stock trading prices of $5.50 to $6.00
per share and on current interest rates, the Company's ability to utilize its
existing NOLs would be limited to approximately $2.9 million to $3.2 million per
year (reduced in the first five years following the change of ownership to the
extent necessary to permit the deduction of certain realized tax operating
losses that were built-in as of the change of ownership). If the restriction on
the utilization of the NOLs did apply, a significant portion of the NOLs would
expire before the Company was able to utilize them. Any unused annual NOL
limitations as well as any tax operating losses generated after the change of
ownership, adjusted for tax attributes existing prior to the change of ownership
date, would carry forward for use in future years without restriction by Section
382.
REVERSE AND FORWARD STOCK SPLITS
The Company's stockholders at the 1997 annual meeting approved an
amendment to the Company's certificate of incorporation which authorizes the
Board in its discretion to effect, prior to the annual meeting of stockholders
in 1998, either of two different reverse stock splits of the Common Stock,
followed by a forward stock split. Pursuant to the reverse stock split, each 100
or 200 shares, as determined by the Board, of the then outstanding Common Stock
would be converted into one share. Stockholders who own fewer than 100 or 200
shares would no longer be stockholders of the Company but instead would be
entitled to receive from the Company a cash payment based on the closing price
of the Common Stock in lieu of receiving less than one whole share. Pursuant to
the forward stock split, on the day following the reverse stock split, Common
Stock then outstanding would be converted into the number of shares of Common
Stock that such shares represented prior to the reverse stock split. Thus, if
the stock split is effected, stockholders who currently own fewer than 100 or
200 shares of Common Stock, as applicable, would cease to be stockholders unless
in the interim they acquire sufficient additional Common Stock on the open
market or through the purchase and conversion of Series B Preferred Stock.
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
As of June 30, 1997, 11,509,077 shares of Common Stock were issued and
outstanding, and 13,290 shares are held in a disputed claims reserve to be
distributed as disputed unsecured claims are resolved under the POR. All shares
in the disputed claims reserve will be distributed upon resolution of the
remaining disputed claims. The Common Stock is quoted in the over-the-counter
market on the NASDAQ National Market System under the symbol AGLF. The following
table sets forth, for the periods indicated, the high and low closing sale
prices of the Common Stock:
MARKET PRICE
FOR COMMON STOCK
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FISCAL YEAR QUARTER HIGH LOW
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1995 First 10 1/4 8 3/8
Second 9 5 3/4
Third 8 1/2 6 3/8
Fourth 7 5/8 6 1/4
1996 First 6 3/4 5 3/8
Second 6 3/8 5 1/2
Third 6 4 7/8
Fourth 5 3/8 3 15/16
1997 First 6 4 1/8
Second 6 41/64 5 1/2
As of May 2, 1997, there were approximately 30,000 holders of record of
Common Stock, which excludes holders whose stock is held in nominee or street
name by brokers. The last reported sale price of the Common Stock on the NASDAQ
National Market System on July 1, 1997, was $6.75.
No dividends have been paid on the Common Stock during the last two
fiscal years. Furthermore, under the Foothill Debt agreements the Company has
agreed not to declare or pay any dividend (other than dividends payable solely
in its common stock or preferred stock) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any capital stock of
the Company. See "Risk Factors -- Absence of Dividends."
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USE OF PROCEEDS
The Common Stock offered hereby will be sold by the Selling
Stockholder. The net proceeds of the sale of the Common Stock will be held by
the Trustee for the Trust. The Trust is the successor to the trusts created
pursuant to the POR to provide funds to satisfy certain remaining Company
obligations following the completion of the Reorganization Proceedings. The
Trustee will, from time to time, disburse funds from the Trust to the Company
for use in meeting such obligations. See "Selling Stockholder."
SELLING STOCKHOLDER
This Prospectus relates to the offering and resale of Common Stock by
First Union National Bank of Florida (the "Trustee" or the "Selling
Stockholder"), as trustee under the Restated, Amended and Consolidated Trust
Agreement dated as of December 26, 1996 (the "Trust") by and among the Trustee,
the Company and the State of Florida, Department of Business Regulation,
Division of Florida Land Sales, Condominiums and Mobile Homes (the "Division").
The Trust is the successor to (i) the Division Class 14 Utility Fund Trust
Agreement dated as of April 6, 1993 (the "Division Trust") by and among the
Trustee, the Company and the Division and (ii) the Improvements Fund Trust
Agreement dated as of April 6, 1993 (the "Improvements Trust") by and among the
Trustee, the Company and the Division. The Restated, Amended and Consolidated
Trust Agreement governing the Trust is an exhibit to the Company's Quarterly
Report of Form 10-Q for the quarter ended March 31, 1997, which report and
exhibit are incorporated herein by reference. The following summary of certain
provisions of the Trust agreement does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all the provisions of the
Trust agreement.
The Improvements Trust was established pursuant to the POR to provide
funding to install roads, drainage and other improvements as specified in a
settlement between the Company and the Division. The Improvements Trust was
funded by the Company with, among other things, 125,561 shares of Common Stock.
The Division Trust was established pursuant to the POR to provide funding to
ensure an adequate supply of utility-satisfied lots for certain unsecured
creditors who met the terms and conditions of the POR. The Division Trust was
funded by the Company with, among other things, 395,099 shares of Common Stock.
The Trust was created as of December 26, 1996 by the combination of the
Improvements Trust, the Division Trust and certain other trusts previously
entered into among the Company, the Division and the Trustee and is intended to
permit the more efficient administration of the matters previously administered
by the separate trusts. Concurrently, a Utility Lot Trust was created to hold
utility satisfied homebuilding lots, including the lots previously held by the
trusts combined into the Trust. The lots in the Utility Lot Trust are
contemplated to be used to fulfill certain obligations under the Lot Exchange
Program established under the POR to provide utility satisfied lots to persons
who purchased homebuilding lots from the Predecessor Company.
The Trust provides that the Company may withdraw funds from the Trust
from time to time upon certification of an officer of the Company to the Trustee
that the Company will use the funds to replenish the number of lots in the
Utility Lot Trust.
The Trust provides that at such time as the number of non-utility
satisfied lots owned by persons eligible for the Lot Exchange Program (the
"Eligible Lots") is less than or equal to the number of utility satisfied lots
held in the Utility Lot Trust, all assets of the Trust shall be disbursed to the
Company and the Trust shall terminate. As a condition precedent to such
disbursement and termination, the Company is required to provide a certification
to the Division, based upon an independent analysis by a specified valuation
firm, that the number of lots in the Utility Lot Trust equals or exceeds the
number of Eligible Lots. At any time during the life of the Trust, with the
consent of the Trustee, the Trust may disburse excess cash or Common Stock to
the Company.
The Trust provides that it will terminate upon the earlier of (i) full
disbursement of the cash and other assets in the Trust, or (ii) receipt by the
Trustee of a notice of revocation executed jointly by the Company and the
Division (or executed by the Company or the Division and accompanied by a court
order, as provided
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<PAGE>
by the Trust), which notice shall direct the Trustee as to the disposition of
the remaining assets held by the Trust.
In December 1996, the Division and the Company agreed that the Trust
was overfunded, and the Division permitted the Trust to release approximately
$12 million to the Company. Nevertheless, the remaining obligations of the Trust
and the Utility Lot Trust are substantial and are expected to continue for a
number of years. Accordingly, the Company currently is unable to estimate the
likelihood that excess proceeds (if any) from the sale of the Common Stock
offered hereby will ultimately be disbursed to the Company.
As of June 30, 1997, the Trust owned 221,865 shares of Common Stock,
189,876 of which are being offered hereby. After completion of the Offering, the
Trust will own 31,989 shares of Common Stock, which it may offer and sell in
future Offerings.
PLAN OF DISTRIBUTION
The Trust provides that, beginning January 1, 1994 and continuing on
each three-month anniversary of such date until December 31, 1998 (the "Terminal
Date"), the Trustee shall determine how many shares of Common Stock are held in
trust by the Trust (the "Remaining Stock"). Subject to certain exceptions set
forth in the Trust agreement, the Trustee shall sell on the fifth business day
in each calendar quarter of such year, or as promptly thereafter as market
conditions reasonably permit, an amount of Common Stock (the "Quarterly Sale
Amount") equal to (i) the Remaining Stock, divided by (ii) the number of
calendar quarters remaining until the Terminal Date (E.G., in the quarter
beginning on January 1, 1994, the Trustee shall sell one-twentieth of the
Remaining Stock; in the next quarter, one-nineteenth, etc.). If there is any
Remaining Stock as of January 1, 1999, the Trustee shall sell all such Remaining
Stock during such calendar year. The Trustee is required by the Trust to effect
sales of the Common Stock offered hereby in "ordinary trading transactions."
The Trustee is required to delay or refrain from selling any Common
Stock held pursuant to the Trust agreement and scheduled to be sold in a
particular quarter if (i) the Division has instructed the Trustee to delay or
refrain from such sale in writing based upon a determination by the Division
that such sale of Common Stock is not in the interest of maximizing the fund
created by the Trust as a result of extraordinary market conditions or (ii) the
Trustee has determined that such sale would violate applicable securities or
other laws.
The Common Stock may be sold from time to time by the Selling
Stockholder through dealers, brokers or other agents at market prices prevailing
at the time of sale. The Trustee and any dealer, broker or other agent selling
the Common Stock offered hereby for the Trustee or purchasing any such Common
Stock from the Trustee for purposes of resale may be deemed to be an
"underwriter" under the Securities Act and any compensation received by the
Trustee, or such dealer, broker or other agent may be deemed underwriting
compensation. Neither the Company nor the Trustee can presently estimate the
amount of such compensation. The Company knows of no existing arrangements
between the Trustee and any dealer, broker or other agent.
To comply with certain states' securities laws, if applicable, the
Common Stock offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the Common Stock may not be sold unless
it has been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
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The Company has agreed to pay all of the expenses incurred in
connection with the preparation and filing of this Prospectus and the related
Registration Statement, including the fees and expenses in connection with the
registration or qualification of the Common Stock offered hereby for sale under
state securities laws.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon
for the Company by Arent Fox Kintner Plotkin & Kahn, Washington, D.C.
EXPERTS
The consolidated financial statements of the Company at December 31,
1996 and December 31, 1995 and for the years ended December 31, 1996, December
31, 1995 and December 31, 1994 incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 have been audited by
Ernst & Young LLP, independent certified public accountants, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
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